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Why are Lionel trains so expensive?

When the weather turns cold, people frequently ask me where they can buy a Lionel train these days. Then they check prices on their phone and follow up with a second question: Why are Lionel trains so expensive?

There was a time when Lionel built electric trains in the kinds of quantities that game consoles are today. That isn’t the case anymore. But even considering today’s smaller economies of scale, Lionel trains never really were inexpensive once you factor for inflation.

How much does a Lionel train cost today?

Why are Lionel trains so expensive? Even in the 1930s, when you adjust prices for inflation, they cost close to what they cost today. Lionel trains never really were a cheap hobby, though there are some ways to get into it less expensively.

A Lionel starter set, containing a basic locomotive, a loop of track, a few cars for the locomotive to pull, and a transformer, usually costs between $200 and $250. Sometimes Lionel will put together a special set for a retailer to hit a slightly lower price point, but rarely less than $180.

Hobbyist-quality locomotives that are detailed models of large real trains can sell for $1,300 or more.

That’s expensive, especially if you think your kids will tire of watching a train go in circles fairly quickly. My kids would rather play video games.

But Lionel trains were the video games of my dad’s day, and his dad’s day. They didn’t just watch the train go in circles. Well, sometimes they did. But usually they’d come up with a track plan that was a bit more elaborate. And they’d build a miniature world for the train to run in, including hills and scenery and buildings. Some of them looked good and some didn’t, but a kid’s Lionel train layout was a creative outlet much the same way a game like Minecraft or Roblox is for kids of today’s generation.

In the 1950s, Lionel cranked out its most popular models by the hundreds of thousands and enjoyed tremendous economies of scale. Today, model trains are a niche hobby and Lionel is a small segment of that niche. Lionel may only produce a few hundred of some of its models, and in some cases it will announce a product, then withdraw it if there isn’t enough demand. That would have been unthinkable in Lionel’s glory days of the 1950s.

What Lionel trains cost in the 1930s

In the 1937 Sears catalog, a basic Lionel set cost $9.95. A nicer set with a whistle cost $13.69. That sounds cheap, but the cost of living was much lower in 1937 too. Once you factor inflation in, that $9.95 set balloons to $175 in 2018 dollars. The $13.69 set balloons to $240. That’s not too different from what Lionel sets sell for today. The tooling for the components in that set dates to the 1940s so it’s long since paid for, but Lionel added electronic sound and the ability to control the train’s speed with a smartphone or tablet. So today’s train will do a few things the 1937 model didn’t, for a comparable amount of money.

But Lionel didn’t just sell $10 train sets. In its own catalog in 1939, Lionel advertised a $37.50 train set. That’s $680 in 2018 dollars. And Lionel’s best, most detailed scale locomotive, the scale Hudson, introduced in 1938, sold for $75. That’s $1360 in today’s dollars, very close to what today’s most detailed, scale locomotives cost.

Lionel didn’t lower costs in the 1950s. It didn’t need to. World War II forced production of most consumer goods to end, including Lionel trains. A few large dealers like Madison Hardware in New York had stockpiled old inventory but other than buying from them, you couldn’t buy a Lionel train during World War II. When the war ended and Lionel resumed production, they could sell every train they could make at anything remotely resembling its pre-war prices. This situation continued until about 1956.

How my dad’s parents saved money on Lionel trains

A decade after my dad died, I went through his Lionel trains, got them working again, and learned what I could about them. I noticed something interesting. His parents seem to have bought him a couple of starter sets, one in the late 1940s and another slightly nicer set in the early 1950s. He also had a good number of Plasticville buildings, which was appropriate for the period. But I noticed something when I looked at his track. About all the Lionel track he had would have come from those two starter sets. The rest was cheaper Marx track. Marx was a competitor that sold Lionel-like trains for a fair bit less. The saying in the 50s was that if your dad had a good job, you had a Lionel or American Flyer train. And if he didn’t, you had a Marx.

My grandfather was wealthy but tight, and somehow he found out the cheaper Marx stuff worked fine with Lionel. And once you attached the track to the table, you couldn’t tell the difference. Looking at the Sears catalogs of the early 1950s, I can see how he may have figured that out. I wonder how many other people did too.

Why not move production overseas to cut costs?

In the 1990s, Lionel’s two biggest competitors, K-Line and MTH, did just that, moving production to South Korea and then eventually to China. Lionel eventually had to follow in order to keep its costs competitive.

The problem, from our point of view, is that as the overseas economies develop, costs increase again. Moving production from South Korea to China alleviated that to a degree. But the same thing is happening in China now. And moving production out of China is something the Chinese government went out of its way to make difficult. Once the tooling comes into China, it can’t come back out. In moving to China, Lionel and its competitors made a kind of Faustian bargain. Moving production again will require new tooling, which will increase costs. For new, high-end product that needs new tooling anyway, this would make sense to do.

How to save money on Lionel trains today

Lionel’s competitors don’t undercut Lionel by much these days, so my grandfather’s trick doesn’t work as well anymore. Unless you happen to live close to a Menards store, there’s no one consistently underselling Lionel by 25% anymore like Marx did. Menards doesn’t sell its own complete train sets, but it does sell train cars for considerably less than Lionel, or anyone else.

But there is a less expensive Lionel starter set that you can buy and then apply my grandfather’s strategy toward.

Lionel has been experimenting with a product line it calls Lionel Junction. These are cut-down train sets that sell for around $100. The set includes a small locomotive and small freight cars that run on four wheels instead of eight and a loop of Lionel Fastrack. Aside from running on remote control and having modernized track with plastic roadbed, they resemble the trains Marx sold in discount stores for $15-$20 in the early 1970s. But guess what? Adjust for inflation and those cheap Marx sets come within about 10 percent of what Lionel is asking for its Lionel junction sets.

The nice thing about a Lionel Junction set is that if your kids take an interest in it, it will all work together with Lionel’s more expensive sets. Or you can supplement the set with Menards cars and end up with something that resembles a more expensive Lionel set, for less money.

And if your kids don’t really take to it, it will work nicely around the Christmas tree. I wouldn’t say $100 is a small sum of money, but it’s better than risking $250 on Lionel’s costlier Pennsylvania Flyer set, which for many years was Lionel’s least expensive option.

You can save money on Lionel trains by buying used

Another option is to buy used trains. Used Lionel trains are all over Ebay, and most hobby shops that sell new Lionel trains also sell vintage ones. While vintage Lionel trains aren’t worthless, they’re no longer the sought after collectibles they were a couple of decades ago. Your local dealer may be able to set you up with something a little better than a Lionel Junction set for a comparable amount of money, just depending on what you’re after.